It's time for Hulu to grow up, scope out a strategy and stop making suitors jump through hoops

Alan Breznick, Cable/Video Practice Leader, Light Reading

July 22, 2013

3 Min Read
What Now, Hulu?

Now that Hulu's three owners have turned down big bucks for the popular Web video service for the second time in less than two years, it's time for them to do something completely different.

Like what, you say? Well, after rejecting more offers than the Bachelorette in an average TV season, maybe Hulu should stop being such a tease. The suitors may well stop calling if Hulu keeps making them jump through hoops for love and money, only to skirt a real relationship.

More importantly, maybe Hulu's corporate masters should finally decide what they want their promising but awkward five-year-old to be when it grows up. Because right now they're confusing the hell out of the poor kid and the many fans that care about its future.

The confusion is there for all to see. For one thing, Hulu's two controlling co-owners -- 21st Century Fox (a recent offshoot of News Corp.) and the Walt Disney Co. -- can’t seem to settle on whether it should be primarily a free, ad-supported service or a premium, ad-free product. While Disney has favored the free, ad-supported approach, Fox has pushed for the $7.99-per-month subscription model that Netflix has championed. So, while Hulu dances on the premium stage with a pay service called Hulu Plus, it hasn't made a strong commitment to the concept.

For another, Fox and Disney apparently haven't worked out whether Hulu should run new TV shows almost immediately after they first air on their home networks or 30 or more days after they initially run. Although Hulu made its big splash with viewers several years ago by offering them a way to watch new shows online legally soon after they debuted, its owners have reportedly been squabbling over whether they should hold back certain shows from airing or place them only on the premium Hulu Plus service.

Finally, Disney and Fox have given mixed signals on Hulu's commitment to exclusive original programming. While Netflix made big headlines late last week by taking home an impressive 14 prime-time Emmy nominations for its two new original, non-TV series, Arrested Development and House of Cards, Hulu has not been nearly as aggressive or successful as its bigger Silicon Valley rival.

As a result, the streaming video service has fans, financial analysts and industry watchers scratching their heads in confusion about its long-term strategy, or apparent lack of same -- despite the fact it has signed up more than 4 million subscribers, attracts 30 million unique visitors each month and produced US$690 million in revenue last year almost in spite of itself.

In a joint press statement, Hulu's owners expressed a renewed commitment to their young charge, pledging a fresh investment of $750 million in the company. This money will reportedly be spent on creating and buying new content, beefing up marketing, improving technology and drawing talent.

That's a step in the right direction. But it's still a far cry from the $2 billion or so that Netflix claims to spend on content each year.

Beyond the financial commitment, Disney and Fox executives said they're finally on the same page about Hulu's future. In one press interview after the sale fell through, for instance, Disney Chairman & CEO Bob Iger said "the interests of News Corp. and Disney galvanized during the [auction] process."

Perhaps. If so, that would be a big step forward for Hulu too. But it's sort of hard to believe, especially when the company’s owners still haven’t spelled out Hulu’s strategy going forward.

So I'd heartily recommend that Disney and Fox make up their minds already. What do you want Hulu to be, folks? At this point, any decision, even the wrong decision, would probably be better than no decision at all.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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